Miller Magazine Issue: 147 March 2022

124 MARKET ANALYSIS MILLER / march 2022 The war between the world's two grain giants Russia and Ukraine is monitored with great con- cern by the grain markets. After Russia launched a military operation against Ukraine on 24th Febru- ary, wheat futures on the Chicago Board of Trade surged to the highest level since 2008. It is feared that if the tension in the Black Sea is prolonged, prices will go even higher and the world could face a food crisis. Andrey Sizov, managing director of SovEcon, one of the leading agriculture consultancies in Russia, answers Mille Magazine’s questions on the impacts of the war on the grain markets. Sizov's comments on the hottest topic in the markets are as follows: Given the two countries’ huge share in the global grains market, how the Russian attack on Ukraine has affected the markets so far? No new deals, export flows have stopped apart from several vessels which have been loaded in Russian Black Sea ports. Chicago rallied 25%+, and if the war is not over shortly it's not the end. Has there been a disruption in wheat export from the Black Sea? Do you expect that grain exports from the region will remain steady in the near term? Huge. The Azov Sea (a few minor Ukranian terminals and many Russian ones) is closed, main Ukranian termi- nals in Odessa & Nykolaev are closed. Russian terminals in the Black Sea are open but there are no fresh vessels going there due to war risks. Can you share your evaluation regarding the wheat export pace of Russia since the beginning of January? We estimate Russian wheat exports at 2.4 MMT in Jan and 2.8 MMT in February. Exports sped up ahead of the quota, Russian wheat was regaining its competitive edge fast in 2022 until recent events. Looking for the future, what are the possible impact of the Russia-Ukraine tension on the wheat and corn markets? Depends on how long this war will last. Optimistic sce- nario - it ends relatively soon (i.e. March) and will see exports flowing in several weeks. Pessimistic one - it lasts for several months which implies that Ukraine will “The Azov Sea is closed. Main Ukrainian terminals in Odessa & Nykolaev are closed. Russian terminals in the Black Sea are open but there are no fresh vessels going there due to war risks. Wheat export flows have stopped apart from several vessels which have been loaded in Russian Black Sea ports. Global food prices which were close to stabilization in early 2022 will continue to rise short-term.” Prolonged Russia-Ukraine war may push grain imports bills further Andrey Sizov Managing Director SovEcon